Ema Izati Zull Kepili - Universiti Sains Malaysia

When the property liberalization was announced in 2009, Malaysia faced high demand from foreigners. Consequently the price of houses increased significantly. This paper intends to examine the impact of liberalization on house price between the period of 1999 and 2012. By utilizing Johansen Cointegration test, the relationship between liberalization and house price in Malaysia is proceeded with Vector Error Correction Model. The findings show that liberalization has a positive and significant impact on house price, thus warrant monetary policy to be taken cautiously so as not to jeopardize the locals’ need for affordability housing at the expense of foreigners demand

House price, liberalization, Malaysia, Long-run relationship, VECM